Setting up a low fee SMSF with with esuperfund 

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Introduction

If you are looking for general info about SMSF's and whether or not a low fee SMSF is  right for you then esuperfund is good starting point with plenty of free information. Self managed super funds or SMSF's are characterized by complex compliance requirements and much higher management costs than normal Super funds. Yet they are the only way to hold title to a property. I regard holding a title to estate as a fairly save investment in case of financial turmoil. But in case of war and natural catastrophe the risk is quite high if you don't have sufficient means to diversify. With the arrival of online SMSF's admin and compliance costs have become very affordable, but the trustees need to exercise their due diligence.

How I got interested in SMSF's

With a regular Super fund investors can only invest in listed property funds who's value can fluctuate significantly. My preference is to hold title to another residential property and hence I needed to set up a SMSF.
Generally SMSF's are a scheme for the rich. Since I can only afford a system that requires some self education I chose esuperfund which operates at a small fraction of the industry standard costs.

Exploration - Step 1

After my retrenchment in 2009 I took Superannuation advise. I was sitting through an 1 hour interview, filled out forms and got back a report valued $ 1100.- The report recommended to set up a SMSF, which would cost about 6000 dollars per year to cover financial advise and compliance services. I shied away from that because in my opinion my fund was not growing anymore and not big enough to justify a 2% admin burden.

Exploration - Step 2

Last year esuperfund ads where popping up on my computer and I signed up with esuperfund, because they offered free setup and waved their compliance work fees of $ 700 for 2011 and 2012. Esuperfund only does the compliance work. You decide what you want to invest in yourself. For people like me with limited funds and a bias to hold property this appears to be a great option. My strategy is to hold one property with my SMSF and do any other investments with a regular Superfund.

Step 3 - SMSF Setup with esuperfund 

In April last year I filled out a 5 minute online application. 5 days later I received the documentation to sign and 5 weeks later everything was in place and me and my wife had our own Superfund setup including the

• The SMSF Trust Deed
• Documentation to appoint Trustees
• Trustee Declarations
• Lodgment of an Election for your SMSF to become a regulated SMSF
• ATO Application to obtain a Tax File Number for your SMSF
• ATO Application to obtain an Australian Business Number for your SMSF
• Sample Investment Strategy that you can adopt for your SMSF or modify if required
• Resolutions and minutes to acknowledge the establishment of your SMSF
• Application to establish the ANZ V2 Plus Account
• Application to establish the Broker Account with either EBROKING or CommSec
  

Step 4 - Rolling over money into the new SMSF

This is typically a 3 week process and in some cases it can be done online.

Step 5 - Learning the rules

Step one to four was easy and did not require much commitment. Now that I am a trustee the actual work starts. It requires a fair bit of effort to read the trust deed, absorb the rules, read all the booklets provided and browse esuperfund's online education. In addition esuperfund answers my questions by email and phone.

Step 6 - Investing

That is the exciting part. I have finally arrived to make my first investment in a residential development project. What's next ? Probably buying a $250k established property in regional Victoria. Why established ? To hold land and buy future development potential.

To read an article from the June 2012 YIP Magazine - Click here

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